$3bn economic aid expected from PM Khan’s Saudi visit — economists

KARACHI: Faced with a financial and economic crisis, Pakistan Prime Minister Imran Khan’s first visit to Saudi Arabia could be the ideal solution to boost the country’s political and economic confidence, experts said on Tuesday.
The trip, which begins on Tuesday, holds even more significance as Khan is expected to seek $2-$3 billion in economic aid from the Kingdom, with an urgent need to inject around $9 billion into the economy — to stabilize external accounts largely inflated from high imports and insufficient exports.
“Pakistan expects an injection of around $2 billion to $3 billion in order to stabilize its foreign reserves position, currency and external balance sheet,” Dr. Bilal Ahmed, senior economic analyst, told Arab News.
Adding that Pakistan would largely benefit from the visit, especially if the Kingdom is convinced “to supply oil at concessionary rates which would mitigate pressure on the import bill to a large extent,” Dr. Ahmed said he believed, if successful, this “would be a big achievement of PM Khan”.
During the last fiscal year, 2017-18, the country’s imports of petroleum stood at a whopping $13.27 billion, imported from different countries, including Saudi Arabia. “If Pakistan gets the oil at a deferred payment or at relaxed conditions the issue of country’s cash will be resolved,” Syed Mazhar Ali Nasir, Senior Vice President of Federation of Pakistan Chambers of Commerce and Industry — an apex body of Pakistan’s industrialists and traders — told Arab News.
Bilateral trade is another area where economists stressed a need for negotiations with the Kingdom. “Seeking more waivers from payment on oil imports and loans from the Islamic Development Bank through Saudi’s help, we should explore avenues for exports to Saudi Arabia by ending tariff and non-tariff barriers that have decreased trade of goods and services,” Dr. Ikram ul Haq, a senior economist and expert in legal matters, suggested.
Despite holding great potential, bilateral trade between Pakistan and Saudi Arabia is only $3.4 billion and largely in favor of Saudi Arabia. Pakistan imported $3.1 billion worth of goods from the Kingdom during the fiscal year 2017-18, while exports stood at $316.7 million, data shared by the State Bank of Pakistan showed.
Suggesting new means to explore bilateral trade and investment — by relying less on traditional goods and services – Dr. Haq said: “Pakistan should try to win Saudi’s contracts for IT services as this is the area where we have potential to earn foreign exchange but we never tried. We must come out of traditional item like textile.”
Saudi Arabia imports a huge quantity of sanitary ware during the Hajj season mainly from other Middle Eastern countries. “This sanitary ware is imported from Pakistan and then exported after value addition. If Saudis start a joint venture with Pakistani manufacturers both countries can benefit,” Nasir said.
Adding that agriculture could be another sector that Pakistan could tap into to seek Saudi investment through joint ventures, Dr. Haq said: “This area has potential to grow fast and create export surplus. Saudis investors can be lured for modern corporate farming in Pakistan to earn substantial profits.”
Saudi officials have, in the past, expressed an interest in Pakistan’s mega projects – such as the China Pakistan Economic Corridor --- to help Pakistan benefit from Saudi Arabia’s investment and expertise in petrochemical sectors. “Pakistan should also seek Saudi direct investment in infrastructure development that will not only ease out the balance of payment situation but also yield long term benefits,” Dr. Haq said.

$3bn economic aid expected from PM Khan’s Saudi visit — economists